Bank transfers will be immediate and free within Europe

As of November 21, 2017, bank transfers will be immediate and free for users who have bank accounts within the European Union. The European Central Bank (ECB) had planned to introduce the TIPS (Target Instant Payment Settlement) system by November 2018 but it will finally be launched a year earlier.

Transferring money almost in real time between the different European countries will be a reality already as of Tuesday. And free. For now, operations will be limited to a maximum of 15,000 euros and only in nine countries – Spain, Germany, Italy, Austria, Estonia, Latvia, the Netherlands, Finland and Lithuania – but the goal is to extend this platform by November 2018 to all 31 European countries (including Belgium) and banks within the Single Euro Payments Area (SEPA).

One year ahead of schedule, the European Central Bank (ECB) will start with the TIPS (target instant payment settlement) system to improve bank transfers between the different countries. The promise is that the money will become available in the account of any person or company in just 10 or 20 seconds; today, a bank transfer takes, in average, 24 hours and in some cases, if the order is given just before a weekend, it can take up to four days.

TIPS Scheme – Source: European Central Bank

TIPS will allow citizens and businesses to make payments through their bank, anywhere in the euro area in a matter of seconds, helping to deepen the integration of the euro area, the ECB explains.

The success of this highway of payments will depend on the number of financial entities that join the platform. Adherence to this new payment scheme is optional and not mandatory. Financial entities may even choose whether to join only as recipients or as issuers. But the European Payments Council, the forum for discussion of the various existing payment tools, responsible for operations in excess of € 39 billion in Europe alone, has already called on all banks to join the initiative.

So far, there are a total of 585 banks from nine European countries that have joined these express transactions. Almost all Spanish banks, for example, have already joined the program, including credit unions, while in Germany the incorporation of the banks will gradually take place until July 2018. In addition to the 28 countries of the European Union, SEPA, Iceland, Liechtenstein, Monaco, San Marino, Norway and Switzerland. It remains to be seen what will happen to the UK after brexit.

For now, the great difficulty and challenge, especially for companies, is that these instant transfers will have a maximum limit of only 15 thousand euros per operation. The good news is that these international payments – which will initially be free of charge – will have a maximum price for banks of 0.20 cents per transaction, at least during the first two years of operation, so money transfers to other European countries should be much cheaper for everyone.